"The Economic Forum": Middle East conflict is the greatest threat to global economic prospects
According to The National, 97 percent of senior economists surveyed by the Forum confirmed that the war in the Middle East, now in its seventh month, represents a particular concern and could trigger strong economic headwinds over the next 12 months, given Iran’s continued targeting of commercial shipping in the Strait of Hormuz.
In late August alone, Tehran threatened 46 commercial vessels transiting this vital waterway, through which typically pass about one-fifth of global oil and gas supplies. The Forum, in its “Senior Economists’ Outlook” report for September, noted that the number of ships passing through the strait had fallen to levels among the lowest since the conflict began, potentially having direct repercussions on the global economy.
Furthermore, escalating Russian and Ukrainian attacks on Black Sea ports and shipping operations could disrupt seaborne grain exports from two of the world’s largest suppliers, potentially reducing global grain exports by up to 17 percent this year.
The direct economic repercussions of geopolitical conflicts, particularly the spillover effects of the war between the United States and Iran on energy, commodities, and global trade sectors, appear more pronounced than any other potential threat to economic growth.
Fifty-eight percent of participating economists cited asset price corrections as one of the biggest threats, while 42 percent viewed trade and investment restrictions as the primary threat. Additionally, 39 percent attributed risks to energy shocks stemming from wars, while 17 percent pointed to supply chain disruptions.
Despite future geopolitical challenges that the Middle East and North Africa region may face, economic outlooks for the region have improved compared to the Forum’s survey conducted in May.
According to the report, approximately 57 percent of senior economists expect moderate or stronger growth over the next 12 months, compared to only 12 percent who anticipated moderate growth in May, while 42 percent still expect weak growth.
The hospitality, aviation, and tourism sectors are among the most severely affected by Iran’s targeting of industrial infrastructure, the energy sector, and civilian infrastructure across various parts of the region.
The International Monetary Fund (IMF) lowered its growth forecast for the Middle East in 2026 to 0.7 percent, a decline of 1.2 percentage points from its April estimates, due to the repercussions of the closure of the Strait of Hormuz on regional energy exports.
In its July “World Economic Outlook” report, the IMF projected a recovery in growth to 6.5 percent in 2027, an increase of 1.9 percentage points compared to its previous estimates.
The Forum predicted that Saudi Arabia’s economy would grow by 1.7 percent in 2026, while Iran’s economy would contract by 5.4 percent during the same year.
Regarding the labor market, 63 percent of respondents expect no change in unemployment rates, while 22 percent anticipate an increase. This suggests that the improved outlook reflected in the survey indicates a prospect for stability, rather than a full reflection of the economic impacts resulting from the conflict.
Inflation expectations in the Middle East have shown a notable moderation compared to the May survey. Approximately 62 percent of respondents expect moderate inflation over the next 12 months, while 27 percent anticipate high or very high inflation, compared to 55 percent who expected high or very high inflation levels in May.
The forum’s report noted that price pressures remain highly divergent across the region’s economies, pointing to a 0.6 percent year-on-year decline in consumer prices in Morocco during July, compared with Iran’s annual inflation rate of 84.4 percent in August.
